• EUR/USD +0.4%
• GBP/USD +0.4%
• GBP/JPY +0.3%

EUR/USD

Trichet Alludes To Higher Rates: Addressing a news conference in Basel, Switzerland, European Central Bank President Jean Claude Trichet noted that markets have adequately absorbed higher rates on global growth.  Subsequent statements boosted Euro bids as the central bank went on to state that global growth â�,��"is certainly encouragingâ�,� and as a result, higher interest rates donâ�,��"�t look to deter from any of the positive outlooks that are forecasted.  This single piece acted as a confirmation that further rate hikes look to be considered in the near future as inflation continues to loom over the member states of Europe.  Additionally boosting the notion has been improved figures at the consumer and business levels with confidence rising in both sectors last month.  This sentiment will be boosted further if the German ZEW survey posts the expected 71 print in tomorrowâ�,��"�s report.  Reflective of the higher rates of consumer confidence and improved sales interest, both current and economic sentiments should print advancing figures.  However, with a negative read, Euro fortunes would reverse as a temporary setback seems to be filtering through the economy.

Rumorville: Offers look to keep the underlying contained heading into the close off of the current 1.1955 price.  Selling pressure looks to be initiated below at 1.1950 with thinner interests at 1.1955.  Should the price carry higher, interest residde at 1.1965/75 with stops above at 1.1980. Bids are coming in significantly lower at 1.1910/15 with heavier considerations at 1.1880.

GBP/USD

Producer Prices Remain, Bolstering Sterling: Reversing the fortunes of the British sterling, traders bid the underlying higher as producer prices remained unchanged, hovering the 2.9 percent level.  Expectations were for prices to decline slightly by 2.8 percent and prompt further speculation that rate cuts may be forthcoming in the near future.  However, with inflationary pressures still looming over the economy and a positive turn for the economy in the works, it seems less and less likely that monetary authorities will entertain the idea of a cut.  With no new data on the schedule for tomorrow, traders will remain on the wayside as we head into the Asian session.  Focus will subsequently turn to the upcoming current account data tomorrow as concern is building over the ballooning deficit that could affect the dollarâ�,��"�s strength when tightening concerns end.  Should the figure fall below the $200 billion plus figure expected, traders should expect to establish a longer uptrend on todayâ�,��"�s momentum.

Rumorville: Offers remain similar to the euro positioning as sellers reside above current market.  Selling pressure seems initated at 1.7325 and above at 1.7350.  Conversly, bids remain at 1.7250 and 1.7235, keeping the current momentum.

GBP/JPY

Carry Reinitiation: Carry traders reentered on the GBPJPY cross pair as inflationary concerns boosted the pound rate seeker while less than expected deflator figures lent to a longer wait on rate increases in Japan.  Although gross domestic product was higher at an annualized pace of 5.4 percent, underlying deflation persists as the deflator marked another decline of 1.6 percent.  With deflation still looming, it is no surprise that government officials havenâ�,��"�t argued against the recent backings for the end of quantitative easing by central bankers.  With that said, and rate increases not forthcoming, bids came in for the British pound versus the cheaper Japanese yen.  The tide should turn as speculation is expected to translate into volatility following the anticipated release of the Bank of Japan minutes.  Although previously noting plenty of jawboning, the minutes will be scrutinized for the timeliness of such a move on higher interest rates.  Should indications be in the near term, confirming earlier whispers of April, look for the underlying yen to garner more than just a few pips on the session.

Richard Lee is a Currency Strategist at FXCM.